$52.7B CHIPS Act Lures Hundreds of Businesses in First Year

Companies are lining up for the prospect of an American semiconductor manufacturing renaissance, hoping to cash in on billions in US government funding.

The US Commerce Department on Wednesday said more than 460 companies have signaled interest in winning semiconductor subsidies through the $52 Billion “Chips for America” legislation signed into law one year ago.

In a statement, President Joe Biden said companies have announced $166 million in semiconductor and electronics manufacturing since the bill became law, saying the effort would “make America once again a leader in semiconductor manufacturing and less dependent on other countries for our electronics or clean energy supply chains.”

The Commerce Department, while yet to award funding, started accepting applications for the subsidy program in June. The program covers US semiconductor manufacturing along with production of equipment and materials for making chips.

“We’re finally making the investments that are long overdue to secure our economic and national security,” Commerce Secretary Gina Raimondo said during a press briefing. “We need to move quickly but it’s more important that we get it right.”

The law also allows businesses to take advantage of a 25% tax credit for building chip plants, which the Commerce Department estimates to be worth $24 billion.

Pandemic Sparks Chips Race

Global lockdowns during the COVID-19 pandemic crippled supply chains — especially for semiconductors, the majority of which are produced in China and Taiwan. The US, once a leader in silicon production, has dropped to producing just about 10 percent of the world’s chip supply.

Efforts to diversify the semiconductor supply chain are also taking place in Europe and India, with massive investments from Intel, TSMC, and other semiconductor companies.

Al Thompson, vice president of US-Canada Government Affairs at Intel, in a blog post said the company was doubling down on its efforts to increase research and development of chips and shared new photos of the company pouring concrete at its Ohio manufacturing plant now under construction. Intel has pledged more than $43.5 billion in new manufacturing investments in Ohio, Arizona, and New Mexico.

“Even with this progress, our industry must forge new partnerships with the government to maintain America’s technology leadership,” he wrote.

Overcoming Semiconductor Talent Shortage

For all the promise of rekindling North American chip manufacturing, one big hurdle remains: The US doesn’t have nearly enough qualified semiconductor workers to meet demand. The Semiconductor Industry Association (SIA) expects the industry’s workforce to grow 33% by the end of the decade to 460,000 jobs, according to a report. But at the current degree completion rate, as many as 58% of those projected new jobs (and 80 % of new technical jobs) could go unfilled.

“Closing the talent gap is of critical importance to the success of the US economy and the semiconductor industry,” according to the report.

In May, author and former Microsoft CIO Jim DuBois told InformationWeek that the lofty chip foundry plans would hinge on education and training. “Whether that’s in semiconductor engineering, or software development — we just don’t have enough people to do it all and we’re going o have to have more specialized, focused training…”

Intel’s Thompson pointed to the company’s $100 million investment pledge to expand semiconductor education, research, and workforce training opportunities. “Time is of the essence — we can’t let up,” he wrote.

For its part, the CHIPS Act dedicates $11 billion for chips manufacturing, research, and development. The Commerce Department said its focusing on establishing a National Semiconductor Technology Center along with the departments of Energy, Defense and the National Science Foundation, “to better integrate research and development and workforce efforts across the semiconductor ecosystem.”

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